It’s already rallying. Let’s see whether it will break out above 1.3060.
Market Participants Betting on Nafta Deal between US and Canada
The Canadian Dollar strengthened to a two month high against US Dollar earlier this week. Market participants seem to bet on possible inclusion of Canada in a new Nafta pact. The U.S. has just concluded a successful bilateral talk with Mexico on Monday. Under the new agreement, cars need to have 75% of their content originate in the U.S and Mexico. The current Nafta requires 62.5% originate within North America. Under the new deal, 40-45% of auto content need to be made by workers who make more than $16 per hour, favoring the U.S. and Canada.
President Trump has threatened to put 25% tariffs on Canadian-made cars if a three-way deal can’t be reached. The major disagreement between Canada and U.S. is Canada’s insistence that the dairy supply management system is not open for negotiation. Trump has repeatedly said Canadian tariffs on some dairy products are unfair for U.S. producers. However, Prime Minister Trudeau on Wednesday has defended the supply management system that controls production of some Canadian farm products. The dairy issue is a difficult one for Prime Minister Justin Trudeau. The majority of domestic dairy industry is in Quebec and Ontario, and if they cave in the U.S. demands, they risk losing a lot of votes.
If a deal can be reached, the Bank of Canada can continue to focus on the domestic economy without worrying about trade disruption. Trump told reporters at White House on Wednesday that talks with Canada is going well. “They want to be part of the deal. And we gave till Friday and I think we’re probably on track.” Earlier this week Canadian Prime Minister Justin Trudeau said Canada is trying to reach agreement with the U.S. this week but won’t sacrifice its goal of getting the “right deal.” Talks with Canada should continue through the end of the week with aim to include Canada in trilateral deal. If the deal is successful, the Canadian Dollar may rally a lot further.
USDCAD Short Term Elliott Wave Sequence
USDCAD shows a 5 swing sequence from 6.28.2018 high, favoring further downside while rally stays below 8/13 high (1.3178). A 5 swing sequence is part of 7 swing WXY or also often referred to as double correction. The structure calls for further downside to 1.265 – 1.275 area as far as current rally in swing #6 fails below 1.3178. A successful outcome of the Nafta talk this week could cause pair to extend lower as the chart is calling.
The bearish channel is still in place on the USDCAD, but the price is at the upper level from where it may bounce to the downside.
Very good breakout on the USDCAD above the 1.3100 level. The pair finally breaks out of the bearish channel on the daily chart and reaches the 1.3200 level, which could act as resistance.
Good opportunity to go short at 1.3215-1.3220.
The USD/CAD depreciated a lot today. Good support level is seen at 1.2740.
The USDCAD could not hold the 1.3200 level and drops to the 1.3000 level where it may find some support. The next support could be the 55 week EMA around the 1.2926 level.
Will most likely open a long at 1.2885-90, it looks like it has potential.
Bearish week on the Looney. The USDCAD completes its second week in a row falling as shown on the weekly chart. The pair breaks below the 55 week EMA and reaches the 1.2884 level, which has acted as support in the past. Therefore, the USDCAD could bounce to the upside, where the 1.3200 level may act as resistance. Above the 1.3200 level, the 1.3387 level is a more relevant resistance where the pair formed a double top pattern. Below the 1.2884 level, the 200 week EMA may act as resistance at the 1.2636 level.
On the daily chart of the USDCAD we can see that after the bounce from the 1.2884 level, the pair reaches the 200 day EMA around the 1.2960 level. The moving average may act as a resistance, but a breakout of the 1.2960 level may form a double bottom pattern at the 1.2884 level. However, the confirmation line of the possible double bottom is at the 1.3200 level, which is relatively far away. Therefore, a visit to the 1.3200 level could take a few weeks. Below the 1.2884 level, its next support could be at the 1.2800 level.
The USDCAD rallies to the 55 day EMA at the 1.3036 level where it leaves behind a long-legged doji formation on the daily chart, indicating indecision, but volatility. To the upside, the 1.3200 level may act as resistance and to the downside, the 200 day EMA at the 1.2964 level may act as support.
USDCAD started the week on a positive note, yesterday things went South, let’s see what the latest CAD data will bring in less than an hour.
Very good rally on the CAD, supported by the NAFTA 2 agreement. The USDCAD may find some support at the 1.2800 level, but if it continues dropping, it may fall to the 1.2728 level.
The USD regained the dominant position this week. Strange how the Canadian dollar is still rallying against other currencies. Tough market lately.
Immediate res is seen at 1.30, above it I think bulls will aim for 1.3130.
The USDCAD rallies above its 55 day EMA at the 1.2997 level and comes very close to the 1.3081 level, which could act as resistance. To the downside, the same 55 day EMA at the 1.2997 level may act as support.
It’s looking bullish. If next week we see 1.3120 I’m considering going short on the pair.
Seems to have consolidated around the 1.30 area. I don’t think there will be anything major happening to this pair soon.
The USD/CAD pair went to a high of 1.3116 on negative CAD data. Very close to my short entry at 1.3130. Let’s see if it will get there.
USDCAD broke the resistance at 1.3120. I think bulls will try to bring the pair up to 1.3230 and form a double top there.